On June 24, 2024, the U.S. Department of Health and Human Services (HHS) released a final rule establishing stringent financial penalties, referred to as “disincentives,” for healthcare providers found to have committed information blocking.

In instances where the HHS Office of Inspector General (OIG) finds a healthcare provider has committed information blocking and refers the matter to the Centers for Medicare and Medicaid Services (CMS), HHS has established several disincentives to be applied as follows:

• Under the Medicare Promoting Interoperability Program, an eligible hospital or critical access hospital (CAH) that has committed information blocking will not be a meaningful electronic health record (EHR) user during the calendar year of the EHR reporting period in which OIG refers its determination to CMS. This means the hospital will not be able to earn three quarters of the annual market basket increase they would have been able to earn for successful program participation. Moreover, for critical access hospitals, payment will be reduced to 100% of reasonable costs instead of 101%. This disincentive will be effective 30 days after publication of the final rule.

• Under the Promoting Interoperability performance category of the Merit-based Incentive Payment System (MIPS), a MIPS eligible clinician (including a group practice) who has committed information blocking will not be a meaningful EHR user during the calendar year of the performance period in which OIG refers its determination to CMS. If the MIPS eligible clinician is not a meaningful EHR user, they will then receive a zero score in the MIPS Promoting Interoperability performance category. The MIPS Promoting Interoperability performance category score is typically a quarter of an individual MIPS eligible clinician’s or group’s total final score in a performance period/MIPS payment year, unless an exception applies, and the MIPS eligible clinician is not required to report measures for the performance category. CMS has modified its policy for this disincentive to clarify that if an individual eligible clinician is found to have committed information blocking and is referred to CMS, the disincentive under the MIPS Promoting Interoperability performance category will only apply to the individual, even if they report as part of a group. This disincentive will be effective 30 days after publication of the final rule.

• Under the Medicare Shared Savings Program, a healthcare provider that is an Accountable Care Organization (ACO), ACO participant, or ACO provider or supplier who has committed information blocking may be ineligible to participate in the program for a period of at least one year. Consequently, the healthcare provider may not receive revenue they might otherwise have earned through the Shared Savings Program. CMS also finalized in this final rule that it will consider the relevant facts and circumstances (e.g. time since the information blocking conduct, the healthcare provider’s diligence in identifying and correcting the problem, whether the provider was previously subject to a disincentive in another program, etc.) before applying a disincentive under the Shared Savings Program. This disincentive will be effective 30 days after publication of the final rule; however, any disincentive under the Shared Savings Program would be imposed after January 1, 2025.

The final rule also reserves the right of HHS to establish additional disincentives through future rulemaking.

While HHS Secretary Xavier Becerra sees this new rule as a “critical step” for ensuring that patients have access to their electronic health information, many in the industry have raised concerns that these disincentives have gone too far and will unnecessarily harm healthcare providers. In a recent article authored by Andrea Fox of Healthcare IT News, she discusses concerns expressed by the American Hospital Association and the Medical Group Management Association that the disincentives are excessive. Time will tell how aggressive the OIG and CMS will be in imposing these penalties.

Given these significant financial consequences for information blocking, healthcare providers should continue to be vigilant in their efforts to implement proper policies and procedures to ensure timely and proper access, exchange, and use of electronic health information. Given the complexity of the regulations surrounding this area of the law, consultation with healthcare counsel is critical to ensuring full compliance with the law.